State Politics Aren’t National Politics

The whole discussion over Erik’s post on Chris Christie the other day – beginning with the post itself, but also including the push-back against the post as well – seemed a bit tone-deaf to me as a New Jersey resident.  It’s not that I think austerity measures are of necessity bad for “prosperity.”  Nor is it that I disagree with Erik’s suggestion that it is wrong to assume that the solution to any government budget problem is simply to raise taxes on the rich.  For that matter, I don’t even really disagree with those who voiced opposition to Erik’s post on various grounds, including that his implicit assumption that public employees are overpaid because of unions is off-base.

It’s more that, well, my state has a massive budget problem.  Not a potential budget problem 6 or 7 or 8 years in the future, like the federal government, but a massive and immediate budget problem – as of this time last year, we had a budget shortfall of 30% of our state budget, to say nothing of budget problems on the municipal level.

Moreover, I don’t think people realize just how much less room New Jersey has to resolve its problems through tax increases than the rest of the country.  For starters, let’s look at the fact that New Jersey’s property taxes are almost 40% higher than any other state in the country.  That’s right: 40 percent.  Our median property tax is $6320 a year; the next worst is Connecticut at $4603 per year.  Even if you just look at tax rates rather than gross tax receipts per capita, our average property tax rate is still higher than anyone else in the country.

Meanwhile, our sales tax is also amongst the highest in the country.  And on top of that our state income tax is no pittance, either, with the top marginal rate lagging behind only Hawaii and Oregon (this is different from the average effective rate, of course, but I couldn’t easily find any good data on that).

So we have a massive, crippling, budget shortfall and very little – if any – wiggle room to resolve that shortfall by raising taxes.  Cuts need to be made.  Unfortunately, those cuts are going to be painful, and it does no one any good to pretend that there will be some sort of justice in how they are made.

Nor does it do anyone any good to suggest that the problem is just one that emanates from the unions.  While public sector unions in New Jersey have certainly achieved more success here than in many states, there is no sense begrudging them that success any more than we would begrudge other political interest groups their success in other states.  This is, at a minimum, not a time for vendettas.

And since this is not a time for vendettas, I think more skepticism is warranted towards the Governor’s “privatization” programs than Erik (and, by extension, Matt Welch) has provided.  Much of that “privatization,” purported to be capable of saving the state $210 million a year, seems little different from run-of-the-mill government contracting with private firms, about which I have cautioned before.  Such so-called “privatization” has a tendency to wind up saving precious little money while cutting wages, meaning that the rich get richer, and the middle class less so.

Don’t get me wrong – the NJ public sector unions are ultimately going to have to directly bear the brunt of the cuts more than almost any other group.  But that’s to be expected when they’ve benefited more than other groups from the state’s profligate ways.  We shouldn’t pretend that those unions don’t have every right in the world, just like any other interest group, to fight tooth-and-nail to protect themselves from those cuts.  We shouldn’t pretend that the teacher who loses her job in budget cuts is less of a tragedy than the telecom worker who loses her job because of the weak economy.

Perhaps most importantly, we shouldn’t pretend that the budget cuts will have much of anything to do with prosperity.  They are budget cuts because we have no choice but to enact budget cuts.  Those budget cuts are not going to do much, if anything, to encourage the creation of new jobs in a state whose work force (and tax base) has traditionally been heavily reliant on commutes to the 1st and 5th largest cities in the country that sit just across the Hudson and the Delaware, respectively. In the meantime, the budget cuts will directly result in layoffs and the destruction of reasonably relied-upon pay increases.  Perhaps it was a mistake to schedule those kinds of pay increases in the first place, but once they were put in place, their beneficiaries had the right to rely upon them being there.  The pain of having them taken away is legitimate and real and valid, even if it may be necessary.

Similarly, to the extent the budget cuts will fall on those with lower incomes, those cuts may well be devastating.  Some of them may in fact be self-defeating and prosperity inhibiting by making it more difficult for those individuals to obtain transportation to work.  This kind of suffering counts – and must count – plenty, particularly in a state with one of the highest costs of living in the country.  And, again, we cannot just ignore that the beneficiaries of this assistance have a right to rely upon its being there.  Whether or not these cuts are necessary, we shouldn’t ignore that suffering will entail or attempt to minimize that suffering as merely the necessary response to too-high taxes on others.

As for my overall thoughts on the merits of Governor Christie’s budget cuts – well, like many New Jerseyans, I’m taking a wait-and-see approach, and there have been things I’ve liked and things I haven’t.  I also don’t think anyone really knows how this is going to turn out in the long run.  But New Jersey is facing a set of very specific and local issues, and it would be unwise to extrapolate much from them to the national level.  In particular, it would be unwise to view our predicament through the lens of national politics that would distort it as simply an issue of Republican anti-tax, pro fat cat demagoguery versus Big Labor corruption.